TSANG WAI LUN v. 9000 LTD

HCMP 549/2025

[2026] HKCFI 2104

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 549 OF 2025

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D E C I S I O N

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1.  By an Originating Summons dated 9 April 2025, the Plaintiff (“Mr Tsang”) applies for an Order requiring the Defendant (“Company”) to register the transfer of the share numbered 3 in it (“Share”) by Ms Wan Siu Fong (“Ms Wan”) to him.

Background

2.  Mr Tsang and Ms Wan are brother and sister. They each held a share in the Company. At one point Mr Tsang transferred his share, i.e., the Share, to Ms Wan. His case was that he had transferred the Share to Ms Wan to hold on trust for him pursuant to a written declaration of trust.

3.  Mr Tsang wanted the Share back; Ms Wan refused. He sued her in HCMP No. 1359 of 2022. After two years, they eventually entered into a Consent Order whereby DHCJ KC Chan ordered Ms Wan to transfer the Share to Mr Tsang including by executing and delivering an instrument of transfer, the share certificate, and any other document as the Company may require.

4.  Regrettably the Order did not achieve its purpose. Ms Wan appointed two directors to the Company, who together with her refused to register the transfer. Hence these further proceedings.

5.  The two new directors have since resigned, leaving Ms Wan once again to be the sole director of the Company.

Solicitors Ceased to Act

6.  Twelve days before substantive hearing of these proceedings, the Company’s solicitors ceased to act. No new solicitors came on record. No director obtained leave to represent the Company.

7.  Four days later, a person claiming to be the company secretary of the Company wrote to the Court to seek an adjournment of “4-6 months” purportedly so that the Company may instruct new solicitors. This Court refused to adjourn the hearing.

8.  Ms Wan appeared at the hearing to seek an adjournment and to make submissions. I heard Ms Wan provisionally; I did not accept her to represent the Company. The Company was absent at the hearing. This suffices for an Order to be granted in terms of the Originating Summons.

9.  For completeness, I also considered the Company’s evidence. The purported reasons which the directors gave for refusing to register the transfer are not reasonable; directors acting reasonably and in good faith in the interest of the Company would not have refused to register the transfer of the Share on such reasons.

10.  Indeed, that the other directors have resigned, leaving Ms Wan to be the sole director, only highlights the hollowness of the reasons.

Legal Principles

11.  The relevant legal principles are trite.

12.  The board of a company has a discretion to refuse to register a transfer of shares in it. If it is shown that the board’s decision is not one which a reasonable board can bona fide believe to be in the interests of the company, or that the board has acted for a collateral purpose, the Court can order the company to register the transfer. See: Re Hope Yet Textile Co Ltd [2019] HKCFI 3096 at §§4-11; Re Yuen Kiu Kwan [2009] 3 HKLRD 371 at §35.

The Purported Reasons

13.  The then-directors of the Company gave 5 purported reasons.

(a)  Mr Tsang has a stance that the Company is holding its assets on trust for the paternal grandsons of Mr Tsang and Ms Wan’s father, i.e., for Mr Tsang’s sons, his and Ms Wan’s brother’s son, whilst excluding Ms Wan’s son. This, the board of the Company says, contradicts with the Company’s true objective of supporting the late father, the ailing mother, Mr Tsang, Ms Wan, and their brother.

(b)  Mr Tsang owes the Company money.

(c)  Mr Tsang has made unsubstantiated claims that the Company owes him money.

(d)  Mr Tsang has previously dishonestly tried to cause the register of a transfer of the Share.

(e)  Mr Tsang and Ms Wan are in continuous conflict. His being an equal shareholder would lead to deadlock.

14.  These are not reasons to refuse to recognize someone to be a shareholder – and someone whose status of a shareholder is recognized by a Court Order.

15.  Ms Wan will remain an equal shareholder and a director. In fact, unless and until Mr Tsang takes further action to seek to join the board, Ms Wan will be the sole director. Mr Tsang being a shareholder will not entitle him to cause the Company to act or not to act in accordance with his views. If and when Mr Tsang seeks to join the board, no doubt Ms Wan will consider her response. If there is justification to bar from him joining the board, no doubt Ms Wan will raise it. If there follows any deadlock, the law provides for remedial measures. If Mr Tsang is able to cause the Company to act in any way which Ms Wan believes to be detrimental to the Company’s interest, she can seek recourse.

16.  In fact, Mr Tsang makes some similar allegations against Ms Wan, e.g., that she wrongfully caused the Company to transfer assets to her personal control. I do not need to decide such matters. It is clear enough that Mr Tsang and Ms Wan are in continuous and serious conflict. All the more so the right thing for the board of the Company to do is not side with either side, and also to respect the Court Order which was itself an outcome of the ongoing conflict.

17.  I would also note that I have read the written submissions of Counsel for Mr Tsang, in particular section D therein, where he set out how the documentary evidence undermines or even vitiates the factual validity of the board’s purported reasons. I agree with those submissions.

Conclusion

18.  The application is successful. An Order is granted in terms of the Draft Order submitted by Mr Tsang.